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The Smartest Fed Investors Work For...

Neither do I. I mean we have a life, right? And it's TGIF day. But forget that. Take this one. Trust me.

You will be able to amaze your friends and coworkers, and maybe learn a little something about making money. The question de jour is:

When it comes to Thrift Savings Plan investors which group or occupation appears to be the smartest, as in getting the biggest bang for their investment buck. (Hint: the same group also seems to be most successful at doubling their investment dollars.) Is it:

Rocket scientists at the National Aeronautics and Space Administration

Everybody at the Defense Advanced Research Projects Agency

Physicists at the White Sands National Laboratory

Letter carriers with the U.S. Postal Service

Statisticians with the Bureau of Labor Statistics

Chaplains with the Bureau of Prisons

Senior researchers with the National Institutes of Health

Auditors at the Internal Revenue Service

All of the above

None of the above.

The correct answer is that it appears to be D) USPS letter carriers. The men and women who deliver your mail.

So what do they know, what do they do, that makes them so special? So smart?

They take advantage of free money. They take it, an amount equal to 5 percent of their biweekly pay, and they invest it in the TSP. So if they invest 5 percent of their own, they also use the 5 percent match available from Uncle Sam, thereby investing 10 percent each pay period. Those who max out at 10 percent actually put in a total of 15 percent each time they invest.

Approximately 95 percent of all postal letter carrier investors are taking advantage of the full 5 percent match from the government by investing at least 5 percent of their own salary.

TSP experts credit the National Association of Letter Carriers union with an educational program which has shown members (and most letter carriers are union members) what a superb deal the 5 percent government match is. Many federal unions encourage members to participate in the TSP. And to get the most out of it. And many get the message.

The Federal Retirement Thrift Investment Board, which runs the TSP, can and does gives advice on how the federal 401(k) plan works. But it can't (by law) give the kind of what-are-you-nuts? emphasis that unions can and do for their members.

"Anybody who doesn't take advantage of the 5 percent agency match is leaving money on the table. It's that simple," said a TSP official. For more on that listen to Wednesday's Your Turn with Mike Causey radio show which included Tom Trabucco of the FRTIB.

Many if not most private sector 401(k) plans don't offer employees any match. Some who did stopped doing it over the past few years. Of those that do a 3 percent match is considered very good.

Yet despite the generous government match, which can double the amount you invest, hundreds of thousands of federal workers aren't taking advantage. They are not investing 5 percent themselves in order to qualify for the full 5 percent government match. Some aren't investing anything, so they get only the 1 percent basic match that goes to all FERS employees.

At the end of 2009 there were 421,000 FERS employees who were getting only the 1 percent agency automatic contribution. After the TSP implemented the immediate employer contribution (eliminating the 6 to 12 month waiting period), and a TSP educational campaign, the number of non-investors dropped to 402,000 this year. That's still too many people who are leaving money on the table, but things are getting better.

So, you want investment advice? Talk to the man or woman who delivers your mail.

LATE BREAKING Pay Freeze Update

A move in the Senate to freeze federal pay raises and bonuses for FY 2011 was voted down late yesterday. For more on that, click here.